After tax cuts and increased spending measures have passed through Congress, business economists are expressing optimism that there will be accelerated economic growth over the next two years. This is according to a survey conducted by the National Association for Business Economics. NABE projects that the economy will grow 2.9 percent this year, the best growth in the past three years. Just three months ago NABE was predicting only 2.5 percent growth.
NABE updated their prediction after Trump’s $1.5 billion tax cut passed through Congress successfully and legislatures agreed to raise the budget for military and domestic programs by $300 billion over the coming two years.
NABE forecasters believe that the tax cut and spending increase will increase economic growth by 0.45 percent this year, and 0.3 percent next year.
“In large part, the increase in growth prospects appears related to federal fiscal policies,” said David Altig, chairman of the NABE forecasting group and the director of research for the Federal Reserve Bank of Atlanta.
Trump officials claim that the administration’s economic policies will speed growth to annual rates of at least 3 percent. Most economists doubt this is possible. Many analysts believe that economic growth is more likely to be about 2 percent per year for the next ten years.
Washington lawmakers have until Tuesday to come to an agreement which will cancel the across-the-board spending cuts and automatic tax increases. If not Americans can expect the economy to tumble off what has been so famously dubbed “the fiscal cliff.”
Falling over this cliff, economists affirm, will adversely affect financial markets around the world and send the US economy into a nose dive back into recession. Therefore Republicans and Democrats are working overtime, including holding a rare Sunday session, to come to an agreement whereby taxes are maintained at today’s levels for the nation’s middle class, while entitlement and other programs are cut according to the desires and needs of legislators.
“Now I think that over the next 48 hours, my hope is that people recognize that, regardless of partisan differences, our top priority has to be to make sure that taxes on middle-class families do not go up. That would hurt our economy badly,” Obama said in an interview.
“Democrats and Republicans both say they don’t want taxes to go up on middle-class families. That’s something we all agree on. If we can get that done, that takes a big bite out of the ‘fiscal cliff.’ It avoids the worst outcomes.”
Obama has a plan even if the worst case scenario transpires and no agreement is reached.
“And if all else fails, if Republicans do in fact decide to block it, so that taxes on middle class families do in fact go up on January 1st, then we’ll come back with a new Congress on January 4th and the first bill that will be introduced on the floor will be to cut taxes on middle class families,” he said.